SuperPACs and Secret Money

Below is from a presentation by Mimi MarzianiMoney in Politics After Citizens United: Troubling Trends & Possible Solutions:

SuperPACs

The creation, and subsequent rise, of so-called “Super PACs” is the most prominent post-Citizens United development.  Regular PACs have been around for a long time, but could only accept contributions up to $5,000 from human beings.

Super PACs are mutant PACs that can raise, and then spend, unlimited amounts money from corporations, unions, and individuals on political advertisements, as long as they do not coordinate their spending with any candidate.

Despite popular belief, Citizens United did not create Super PACs—at least, not directly.

The Court, in holding that corporations have the same right to engage in independent spending as natural persons, naively stated that political spending can only corrupt if it is directly coordinated with a candidate’s campaign.

Afterward, the Federal Election Commission (“FEC”) and lower federal courts quickly expanded this logic.  They reasoned that as long as a group is not coordinating with any candidate, there is no anti-corruption reason to impose contribution limitations on that group.  Thereafter, numerous political committees declared independence from their preferred candidate, and Super PACs were born.

Contrary to the Supreme Court’s assumption, however, there is no reason to believe that independent spending benefiting a candidate is, in fact, less likely to lead to corruption than direct contributions.

After all, political candidates want to win.  From the perspective of Newt Gingrich, for example, it makes little difference whether Sheldon Adelson spends millions on supportive campaign advertisements rather than donating that money directly to the campaign—Gingrich will simply consider whether the money helped his efforts.  If the money was valuable to the campaign (and in Gingrich’s case, it was essential), Adelson would be treated no differently than someone who had donated millions directly to Gingrich’s campaign committee.  Except that it is illegal to make million-dollar contributions directly.

To make matters worse, the definition of “coordination” under federal campaign finance law allows a considerable amount of cooperation between a candidate and his or her nominally independent supporters.  (This is largely the result of the FEC’s dysfunction).  Thus, for instance, members of President Barack Obama’s cabinet have appeared at fundraisers for Priorities USA Action—a Super PAC that is supporting Obama’s re-election—to help raise money for pro-Obama campaign ads, without technically violating any coordination rules.  Mitt Romney’s campaign and his Super PAC, Restore Our Future, retain the same political consulting firm and have hired the same event-planning company, rented rooms in the same hotel, and depended heavily upon the same New York City fundraisers—again, all while remaining “independent” under the law.

Now, Super PACs have raised almost $160 million dollars this election cycle and have spent close to $90 million—more than six months from the general election.  Unsurprisingly, wealthy interests have seized this opportunity to throw resources behind their preferred candidate.  At the end of 2011, contributions from donors giving over $100,000 accounted for 85.5 percent of all Super PAC donations.  At last count, about 35 corporations, unions and individuals have donated more than $1 million to their Super PACs of choice.  As Professor Rick Hasen put it, “Super PACs are for the 1 percent.”[2]

the below info is copied from Demos:

Traditional PACs, which may make independent expenditures or contribute directly to candidates or parties, may only accept contributions that can be traced back to an individual donor. Super PACs, on the other hand, may accept contributions from a wide range of sources—including sources that are not required to disclose all of their funders.
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SOURCES OF SECRET MONEY

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501(c)(4) Nonprofit Corporations

The IRS has never clearly defined what it means for political activity to be an organization’s “primary activity” and many 501(c)(4)s take the position that they are permitted to spend up to 49% of their budgets on political activity.26 This can include contributing to Super PACs.

Our analysis of FEC data shows that 5.6% of all itemized Super PAC money came from 501(c)(4) corporations and that 19.1% of all active Super PACs received some portion of their income from 501(c)(4) corporations. For 2011, 12.5% of Super PACs received 501(c)(4) money, accounting for 2.1% of total itemized receipts.
Many 501(c)(4) nonprofits, such as the Sierra Club or the National Rifle Association, have longstanding reputations in the community that would enable a concerned citizen to evaluate their trustworthiness or intentions. But, others appear and disappear rapidly, or choose deliberately obscure names.
In these situations it is particularly difficult for even the most diligent citizen to—in Justice Kennedy’s words—“make informed decisions and give proper weight to different speakers and messages.”
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Contributions from one Super PAC to another Super PAC

Another portion of untraceable money we found in some Super PACs came from other Super PACs that had raised money from an untraceable source.

Demos found that just over 1% of itemized Super PAC money came from other Super PACs and deemed 68% of these funds untraceable.
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Shell Corporations
In the Spring 2011, the Pro-Romney Super PAC Restore Our Future received a contribution of $1 million from the corporation W. Spann LLC. The business, incorporated in Delaware, existed for a matter of months before dissolving; and the donation was its only visible work. This created a reasonable suspicion that the corporation existed for the sole purpose of making this contribution. Only after Democracy 21 and the Campaign Legal Center filed a complaint with the Justice Department did the creator of W. Spann LLC and true source of the $1 million donation come forward as Ed Conard, a former colleague of Romney’s at Bain Capital.
Given that these donations were eventually traced back to their original sources one might argue that they are not “untraceable” (and we treated them as traceable for the purposes of our analysis). But, it appears that certain corporations exist not to conduct regular business but rather simply to necessitate an extra layer of research to discover the true source of contributed funds. This reduces the ability of average citizens to understand the motivations behind the money—an important interest served by disclosure.

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…Sometimes it takes a comic or two to show the absurdities of our world. Watch  Stephen Colbert, Jon Stewart, and former John McCain 2008 Presidential Campaign advisor Trevor Potter discuss the complicated legalese of SuperPACs and the fuzzy borders of “Campaign Coordination.”
Vodpod videos no longer available.

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One thought on “SuperPACs and Secret Money

  1. Pingback: Boston.com: Needham Board of Selectmen votes to support challenge to Supreme Court Decision | we the people | needham

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